Borrowers with credit scores in the 500-579 range are eligible for FHA financing up to which LTV?

Prepare for the Qualified and Non-Qualified Mortgage Test with comprehensive flashcards and multiple-choice questions. Ensure you understand every concept with detailed hints and explanations.

Multiple Choice

Borrowers with credit scores in the 500-579 range are eligible for FHA financing up to which LTV?

FHA loan limits tied to credit score are driven by the required down payment, which in turn sets the maximum loan-to-value. LTV is the loan amount divided by the property’s appraised value. For borrowers with a credit score in the 500–579 range, FHA requires a minimum 10% down payment. That means the loan can be at most 90% of the property’s value, giving a maximum LTV of 90%. If the credit score were higher (580+), the down payment can be smaller (3.5%), allowing a higher LTV (up to 96.5%). So the maximum LTV for 500–579 is 90%.

FHA loan limits tied to credit score are driven by the required down payment, which in turn sets the maximum loan-to-value. LTV is the loan amount divided by the property’s appraised value. For borrowers with a credit score in the 500–579 range, FHA requires a minimum 10% down payment. That means the loan can be at most 90% of the property’s value, giving a maximum LTV of 90%. If the credit score were higher (580+), the down payment can be smaller (3.5%), allowing a higher LTV (up to 96.5%). So the maximum LTV for 500–579 is 90%.

More practice questions